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Businesses: Energy Costs

Volume 727: debated on Tuesday 7 February 2023

11. What fiscal steps he is taking with Cabinet colleagues to support businesses with energy costs. (903525)

Thank you, Mr Speaker. It is good when a Treasury Minister gets the numbers right.

I can confirm that the Government are supporting businesses with energy costs during the winter by means of the energy bill relief scheme. The scheme came into effect on 1 October 2022, and will run until 31 March this year. Following the review of the operation of the current scheme, we announced that we would launch a new energy bills discount scheme, which will provide eligible, non-domestic energy users—including eligible hospices—with a discount on their energy bills for a further 12 months from 1 April until 31 March next year.

Businesses in my constituency are grateful for all the support that the Government have given them over the past few very difficult years—they appreciate that—but what steps are the Government taking to protect energy-intensive industries from high energy prices, about which they are concerned?

My right hon. Friend is right to highlight not only the generosity of the support but the issues facing specific sectors. The Treasury recognises that some businesses are highly exposed to both energy prices and international competition, which means that they are unable to pass on or absorb these higher costs. Following the review of the operation of the current energy bill relief scheme, we decided to target additional support beyond April this year at the most energy and trade-intensive sectors, which are primarily manufacturing businesses.

Metal finishing is a vital component of many strategic industries, including defence, aerospace and energy. Although the process is extremely energy-intensive, businesses such as MP Eastern in Lowestoft do not currently qualify for the additional support that is available, and are therefore losing business to overseas competitors. In order to stop that, strengthen our own supply chain and enhance national security, will my hon. Friend review the support that is available to metal-finishing businesses?

My hon. Friend and county colleague is always championing his local businesses in the Chamber—[Interruption.] I am glad that the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) agrees with me that my hon. Friend is a stalwart champion of his constituency businesses.

We have taken a consistent approach to identifying the most energy and trade-intensive sectors, with all sectors that meet agreed thresholds for energy and trade intensity eligible for ETII support. The firms eligible for the scheme are those operating within sectors that fall above the 80th percentile for energy intensity and the 60th percentile for trade intensity, and those operating within sectors that are eligible for the existing energy-intensive industries compensation exemption scheme. As ever, my hon. Friend is welcome to write to me about the specifics.

St Wilfrid’s Hospice in Eastbourne has just celebrated its 40th anniversary. Some 70% of its running costs are met by the generous public, who love and appreciate all that it does at the end of life, and next month they are literally walking over hot coals in its support. The nature of the setting means that the hospice cannot readily change the thermostat. It has pursued renewables, and the building is efficient. In short, it is doing all it can. After May, its energy costs are predicted to soar by 285%. What support can my hon. Friend outline for St Wilfrid’s, so that energy hikes will not cost therapies, in-patient beds or nursing hours in the community?

I pay tribute to St Wilfrid’s Hospice, and to all those who fundraise to support it. My hon. Friend is absolutely right to raise this issue. As I said to the hon. Member for Denton and Reddish (Andrew Gwynne), we could have chosen to have a much more targeted scheme, which we said we would consider, but in fact we have continued with a universal scheme, covering not just businesses but charities and the public sector. That includes hospices. This new scheme will enable hospices locked into contracts signed before recent substantial falls in the wholesale price to manage their costs and provide others with reassurance against the risk of prices rising again.

Arts organisations have been hit by rocketing energy bills at the same time as audience footfall remains depressed by the cost of living crisis and the residual effects of the covid pandemic. The current rates of cultural tax reliefs were introduced to help theatres, orchestras, museums and galleries to recover during the pandemic, but some orchestras are now saying they are unlikely to survive if the tapering of that 50% orchestral tax relief goes ahead. Will the Minister and the Chancellor look at this urgently and review the reduction from 31 March of this vital support to arts organisations?

On Friday I met representatives of the Federation of Small Businesses and of small businesses in my constituency, and the message from them is that they are extremely worried about their future, about their sustainability and about energy costs. One of the points they highlighted was their concern about what will happen to their energy costs after April. Will the Minister look at matching what the Labour party is proposing, which is cutting small business rates to enable small businesses to save up to £5,000 a year, to ensure that they can continue not just for this year but going into the future?

I have also met the FSB. The one crucial point I would make is that I understand why businesses are concerned in these very challenging times—I ran a small business myself before entering Parliament—but we have to balance out the costs of these schemes to the Exchequer. We have to run sound public finances, not least because that engenders a platform of stability and confidence, which is in the interest of every single business in this country.

I may have missed it, but I do not think the Minister even attempted to answer the question asked by my right hon. Friend the Member for Dundee East (Stewart Hosie) a wee while ago. How can a small retail business possibly be expected to survive if it is facing an increase of more than £100,000 a year on its overheads while at the same time its customers cannot afford to support it because they cannot afford their own electricity bills? Could it possibly be related to the news that BP shareholders are today celebrating the biggest profits in the company’s long history? Does that give the Minister an indication as to where he might look to find the tax revenue to support small businesses and householders?

The hon. Gentleman is aware that we have already introduced two new levies: the energy profits levy, which relates to North sea oil and gas; and the electricity generators levy, which relates to the exceptional returns that generators will have received because of the exceptional prices following the invasion of Ukraine. I said to the right hon. Member for Dundee East that he was more than welcome to write to me with the specifics of the case he mentioned, and I look forward to receiving that letter.